Logistics forms the backbone of every country and India is no different. From agriculture to pharmaceuticals to e-commerce, each of these industries depends on logistics in one way or another. The industry accounts for a whopping 14.4% of India’s GDP – a significant amount higher than the international benchmark of 8-9% – though steps are being taken to bring this number down to par.
While the costs are being taken care of, there is still a need to address the inefficiencies in the sector. The COVID-19 pandemic had an unforeseen side effect of kickstarting the shift to digital and tech-enabled solutions. Demand on India’s online grocery shopping portals surged by up to 80% in 2020, just as operational capacity fell by half. A McKinsey report released at the tail end of 2021 argued for the need for digitalisation in India’s logistics sector and expanded on how digital tools could add value at each stage of the logistics journey.
Technologically-backed logistics are already in use around the world at this point – for one, Amazon’s first “fully autonomous” warehouse robot, Proteus, is touted to work alongside the human workers on the warehouse floor. Read on to explore the nature of tech-enabled logistics at present.
Technological Trends in Logistics Sector – 2023 Edition
Technology is always evolving and the logistics sector finally dipped its toes into the tech side of things. Following are some trends in the Indian logistics sector which are seeing use at present:
Implementation of Blockchain Tools
Blockchain technology is set to improve the credibility of a transaction by duplicating its particulars across a computer network. In addition, as per Mr Nimish Handa, the CEO of Cargo-Partner, blockchain tools hold the capabilities to change how logistics in India work.
This technology will help generate smart contracts that would automatically get terminated if the predetermined conditions fall short of expectations. Such efficiency will allow the freight and transportation solution providing companies to concentrate better on processes that will cut down the delivery time and improve profitability. Blockchain has started seeing real-world application with the likes of Drife, a Bengaluru-based project which leverages blockchain’s decentralisation to create a ride-hailing experience which applies market-dictated pricing, open governance and transparency.
Use of Radio Frequency Identification Chips in Tracking
Delivery tracking is an important aspect of any logistics operation. With the usage of RFIDs in product tags, real-time object tracking is now at your fingertips. This technology can help streamline logistics by improving product visibility through the ability to record changes in an object’s status quickly.
Currently, the biggest RFID project is that of FASTag, the flagship initiative of the Ministry of Road Transport and Highways (MoRTH) for implementing electronic toll collection across the national highways in India. In warehousing, RFID has become crucial in inventory management, allowing for various logistics operations such as order status, sorting, cycle counts, loading and unloading, etc, which improves productivity.
Artificial Intelligence
OpenAI’s ChatGPT launched in late November 2022, exploding in popularity as average individuals could interact with the chatbot and see first-hand what AI could do. Of course, the model has its limitations, but we can expect to see improvements in the future.
In logistics, AI in conjunction with Big Data can automate and simplify multiple processes, such as location intelligence, matchmaking and decision-making. Innovations such as self-driving vehicles, automated warehouses and real-time route optimisation are being proposed for the industry. Streamlined, these can help in providing a better customer experience.
Drone Deliveries
Last-mile deliveries are seeing advancements and growing quicker, thanks to the improved availability of 2-wheeler EVs in recent years. In 2021, “Medicines from the Sky” project saw deliveries of life-saving medication via drones, with the maiden drone delivering a 5 kg of box of vaccines 3 km away in 10 minutes. Currently, many logistics service providers are positive about the prospective application of drones in completing delivery without facing traffic jams. Also, aside from reducing logistics costs, this will also allow reaching difficult delivery areas with ease.
Weighty Challenges in the Indian Logistics Space in 2023
These are a few pressing issues that cause concerns to the logistics companies operating throughout India:
High Order Intensity Ratio
Maintaining a high inventory-order ratio, which is necessary to assure responsiveness, is a difficulty for logistics organisations. More liabilities for inventory management and increased capital expenditures can affect the business in the long run.
Building a Resilient Supply Chain
The supply chain took a heavy hit following the COVID-19 lockdown, leading to a disrupted flow of raw materials and goods, which impacted production. For logistics, both within India and globally, making the supply chain more resilient to unexpected circumstances is the need of the hour.
Warehousing Discrepancies
As warehouse access enables logistics personnel to transport goods closer to customers when demand skyrockets, the companies typically opt for increased storage resulting in faster transit time. Efficient warehousing requires careful planning for best utilisation.
The Road Forward for Tech-Enabled Logistics
Technology is ever-evolving and big players in Indian logistics are already taking steps to address the inefficiencies in the ecosystem through tech-enabled solutions. Even the Indian Government is sitting up and taking notice of the power of technology – Union Budget 2023 has provisions for setting up Centres of Excellence at top institutes and facilitating industry partnerships for R&D. This proposal is just the starting point to realise the vision of “Make AI Work for India”. Given that the digitisation of the sector has already begun, as customers grow more accustomed to the technology, we can expect advances for both the demand and supply sides.
